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At the Fox News-Google Republican debate in Orlando last week, Rick Perry was—as usual—in the cross-hairs. Rick Santorum, the former Senator from Pennsylvania, had one of the most memorable lines of the evening. Said Santorum, incredulously, "[Rick Perry] gave a speech in 2001 where he talked about bi-national health insurance between Mexico and Texas! I mean, I don’t even think Barack Obama would be for bi-national health insurance! So, I think he’s very weak on this issue of American sovereignty.” The implication being that Perry is some kind of one-world government socialist.

Bi-national health insurance is a free-market solution

Except that bi-national health insurance, as Perry once proposed it, is precisely the kind of free-market health policy solution we need more of, not less. Here is the relevant excerpt from the speech that Gov. Perry gave in August 2001 at a U.S.-Mexico Border Summit with regional governors and legislators from both countries (emphasis added):

There are other challenges that require a unified approach, especially in the area of health care. A lack of preventative medicine means conditions that could have been eliminated through childhood immunizations show up in disturbing numbers later in life. Limited availability of medical specialists means conditions like heart disease and diabetes go untreated at alarming rates. In Texas, we recently placed a strong emphasis on preventative care when we expanded access to Medicaid for more low-income children by making the Medicaid enrollment process simpler. We allocated an additional $4 billion to the Medicaid program, and more than $900 million to the Children’s Health Insurance Program. I urged legislators to pass a telemedicine pilot program that will enable, through technology, a sick border resident of limited financial means to receive care from a specialist hundreds of miles away. But the effort to combat disease and illness requires greater cooperative efforts between our two nations. It is a simple truth that disease knows no boundaries. An outbreak of drug-resistant tuberculosis, for example, endangers citizens of both our nations. We have much to gain if we work together to expand preventative care, and treat maladies unique to this region.

Legislation authored by border legislators Pat Haggerty and Eddie Lucio establishes an important study that will look at the feasibility of bi-national health insurance. This study recognizes that the Mexican and U.S. sides of the border compose one region, and we must address health care problems throughout that region. That’s why I am also excited that Texas Secretary of State Henry Cuellar is working on an initiative that could extend the benefits of telemedicine to individuals living on the Mexican side of the border.

Contrary to Sen. Santorum’s impression, the idea here was to explore the possibility of allowing private insurers to cover health services provided in either Texas or Mexico. It was an attempt at studying the deregulation of the provision of health insurance by private entities.

Health care along the U.S. side of the border is in disastrous shape

It’s an innovative solution to a serious problem. As the 2003 Texas report put it, “health conditions on the Texas-Mexico border are among the worst in the U.S., so distressful at times that reports on health conditions suggest a remote country in need of medical missionaries, not a part of Texas.” In 2003, two million people were living along the Texas side of the border, with 34% living below the federal poverty level, compared to 14% for the remainder of the state. Health outcomes and health status are correspondingly poor. In 1999, 30% of Texan children in the region, and 35% of adults below the age of 65, were uninsured.

Legal cross-border employment is substantial. As Kevin Williamson of National Reviewpoints out, more than a million people live on one side of the Texas-Mexico border and legally work on the other side. Kevin goes on to explain:

Let’s say you’re a Mexican national working in Laredo, Texas, with a wife and children in Nuevo Laredo, Mexico. You can buy health insurance for yourself through an employer-provided plan — but not for your wife and children, and not a plan that covers expenses for treatment in Mexico if you get sick or injured while you are there. Health insurance that doesn’t cover you where you are, or that excludes your family, is not terribly useful. And if those uninsured spouses and children get sick or injured, whose emergency rooms are they going to end up in? Mexico’s? Probably not.

Such reforms would provide an important free-market alternative to the so-called “free-rider” problem of uninsured illegal immigrants seeking uncompensated care in U.S. emergency rooms. Bi-national insurance could also help reduce Medicaid spending, which is of course funded by taxpayers.

Medical tourism is a promising approach to reducing health costs

Lest one think that it’s only Mexicans who want to take advantage of Texan medicine, there are huge advantages for Americans to seek Mexican care. There are plenty of standard procedures which can be performed well by Mexican physicians at far lower prices than are required in the U.S. Access to low-cost care could help bring down Texan insurance premiums, making health care more affordable.

One of the biggest roadblocks to medical tourism of this sort is insurance regulation. Many states require that insurers only reimburse for procedures conducted by physicians with a U.S. license. There are some procedures where a patient might save money by seeing a doctor in Singapore, inclusive of airfare, let alone by driving to Mexico. But because U.S. doctors can’t easily refer patients to foreign doctors, and vice versa, it’s much harder to take advantage of these cost differences in reality.

Hence, the goal of bi-national health insurance is to create a legal framework whereby private insurers are allowed to reimburse physicians, pharmacies, hospitals, and other health care providers, on either side of the border, for services they deliver to patients. Such plans already exist in California, due to reforms that were enacted in the late 1990s and early 2000s.

Blue Shield of California, which offers bi-national health plans in that state, estimated that medical costs are 40 to 50 percent lower in Mexico than in California. For example, in 2003, an average stay in a Mexican hospital cost $600-700 per day, compared to $1,100-$1,200 per day in California.

Sarah Kliff points out that Texas businesses were strongly behind the bi-national insurance idea. And small wonder: it would help drive down their labor costs. Unfortunately, as a University of Texas study noted in 2004, Texas physicians strongly opposed the plan, because they feared competition from Mexican doctors, and the proposal went nowhere.

Rick Santorum may have thought he was undermining Rick Perry’s health policy credibility by attacking the Texas proposal for bi-national health insurance. But the only credibility Santorum undermined was his own.